Annual Report and Financial Statements 2007 - Finnlines

paRent cOmpany – accOunting pRinciples 2007
The financial statements are prepared in conformity with the Finnish
Accountancy Act and other regulations and provisions in force
in Finland.
Revenues
Revenues comprise sales income and exchange rate differences
related to sales, excluding discounts and indirect sales taxes such
as VAT.
OtheR OpeRating incOme
Other operating income includes profits on the sale of property and
other fixed assets as well as other regular income not directly related
to the company's sales, such as rents and leases.
FOReign cuRRency items
Receivables and payables denominated in foreign currencies are
valued at the exchange rates prevailing on the balance sheet date.
Exchange rate differences on accounts receivable are recognised
under revenue and exchange rate differences on accounts payable
under operating expenses. Exchange rate differences on financing
operations are recognised under financial items.
DeRivative Financial instRuments
The gains of losses arising from derivative financial instruments
such as forward foreign exchange and option contracts and currency
swaps are recognised under financial items. The interest
received or payable under derivative financial instruments used to
cover the company against interest rare risks is accrued over the
duration of the contract and recorded as an adjustment to the interest
income or expenses of the designated asset or liability.
Finnlines also covers itself against changes in fuel prices by including
bunker clauses in its freight contracts and by using commodity
derivative instruments. The gains and losses arising from
the commodity derivative instruments used to cover the company
against fluctuations in fuel prices are recognised under operating
expenses.
FixeD assets anD DepReciatiOn
Fixed assets are capitalised to their direct acquisition cost excluding
depreciation and other deductions, along with any revaluations allowed
by local accounting practices. Financial items falling due during
ship construction are capitalised to the acquisition cost of the
vessels. Fixed assets subject to wear and tear are depreciated according
to plan based on the economic life span of the asset and its
estimated salvage value as well as the estimated residual value.
FINNLINES 2007
Depreciation periods:
Other long-term expenditure 5 – 10 years
Buildings 10 – 40 years
Constructions 5 – 10 years
Vessels and ship shares 30 – 35 years
Stevedoring machinery and equipment 5 – 15 years
Other machinery and equipment 3 – 5 years
Second-hand vessels are depreciated over their estimated economic
service life.
leasing
Leasing payments are recognised as expenses regardless of the
form of leasing.
stOcks
Vessel stocks of fuel, lubricating oil, materials, provisions and sales
items are recognised under stocks. Stocks are valued on a firstin,
first-out basis at their direct acquisition cost or lower probable
net realisable value.
pensiOn cOsts
Pension costs are charged to the profit and loss account according
to the local practice in each country of operation. The entire unsecured
pension liability is recorded as an expense and liability.
extRaORDinaRy items
Extraordinary income and expenses are essential and non-recurring
events unrelated to the company's regular business activities,
such as income and expenses arising from the termination of operations.
pROvisiOns
Expenses and losses that no longer accrue corresponding revenues
in the foreseeable future and that the Group is committed or
obliged to settle and whose monetary value can reasonably be assessed
are recongised as expenses in the profit and loss account,
and included as a provision in the balance sheet.
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